Paul Krugman and other economists admit they were wrong about globalization

[Stevicus]

Economists on the Run

Paul Krugman has never suffered fools gladly. The Nobel Prize-winning economist rose to international fame—and a coveted space on the New York Times op-ed page—by lacerating his intellectual opponents in the most withering way. In a series of books and articles beginning in the 1990s, Krugman branded just about everybody who questioned the rapid pace of globalization a fool who didn’t understand economics very well. “Silly” was a word Krugman used a lot to describe pundits who raised fears of economic competition from other nations, especially China. Don’t worry about it, he said: Free trade will have only minor impact on your prosperity.

Now Krugman has come out and admitted, offhandedly, that his own understanding of economics has been seriously deficient as well. In a recent essay titled “What Economists (Including Me) Got Wrong About Globalization,” adapted from a forthcoming book on inequality, Krugman writes that he and other mainstream economists “missed a crucial part of the story” in failing to realize that globalization would lead to “hyperglobalization” and huge economic and social upheaval, particularly of the industrial middle class in America. And many of these working-class communities have been hit hard by Chinese competition, which economists made a “major mistake” in underestimating, Krugman says.

And the key question has to be asked:

It was quite a “whoops” moment, considering all the ruined American communities and displaced millions of workers we’ve seen in the interim. And a newly humbled Krugman must consider an even more disturbing idea: Did he and other mainstream economists help put a protectionist populist, Donald Trump, in the White House with a lot of bad advice about free markets?

Let's just look at that question again:

Did he and other mainstream economists help put a protectionist populist, Donald Trump, in the White House with a lot of bad advice about free markets?

Now, they're finally understanding something that I've known for a long time.

To be fair, Krugman has been forthright in recent years in second-guessing his earlier assertions about the effects of open trade. He has also become a leading and sometimes harsh critic of his own profession, especially in the aftermath of the financial crisis and Great Recession, when he declared that much of the past 30 years of macroeconomics was “spectacularly useless at best, and positively harmful at worst.” He admirably held the Obama administration to account for its timid financial and economic reforms. He even had some kind things to say about proto-progressives such as Robert Reich, the former Clinton administration labor secretary who worried about global competition and sought better protections and retraining for American workers, and whom Krugman had once dismissed to me—back in his lacerating days in the ’90s—as an “offensive figure, a brilliant coiner of one-liners but not a serious thinker.”

This is an excellent article, and it's in Foreign Policy, too - not some fly-by-night blog.

It also notes another thing I have noticed all too often:

Those who advocated anything resembling government interference in markets and “fair trade” (more tariffs, unemployment insurance, and worker protections) over “free trade” were usually branded protectionists and excluded from the debate.

So, the question here is: Did he (Krugman) and other mainstream economists help put a protectionist populist, Donald Trump, in the White House with a lot of bad advice about free markets?

 

[joe1776]

So, the question here is: Did he (Krugman) and other mainstream economists help put a protectionist populist, Donald Trump, in the White House with a lot of bad advice about free markets?

No. The Trump promise to keep jobs at home was an obvious ploy to get votes that Baron Trump might have contributed.. Trump didn't need the economists to advise him on the topic and probably wouldn't have understood their advice if offered.

I read both Krugman and Reich. They both sound like they're making sense on the economy to me -- even when they completely disagree.

 

[Cooky]

Only radical, off the hinge capitalists use the word "protectionist" when discussing the economy. The only American people who benefit from outsourcing jobs are the filthy rich, whose only concern is their own bank accounts.

 

[Cooky]

No. The Trump promise to keep jobs at home was an obvious ploy to get votes that Baron Trump might have contributed..

Baron Trump was only 10 years old when his dad was elected president...

 

[Cooky]

This is what happens when liberal economists use European models in American politics, and conservative economists use the most strict and literal application of "free markets".

...All unwittingly slit their own wrists together.

 

[tytlyf]

The only American people who benefit from outsourcing jobs are the filthy rich, whose only concern is their own bank accounts.

Yes, capitalists consumed with greed. Republicans support this policy. If you don't like the policy, stop voting for republicans in congress.

 

[Cooky]

Yes, capitalists consumed with greed. Republicans support this policy. If you don't like the policy, stop voting for republicans in congress.

The Dems also support the same policies, using European models in American policy. They just call it a different name... "globalism".

 

[Heyo]

Yes, capitalists consumed with greed. Republicans support this policy. If you don't like the policy, stop voting for republicans in congress.

... and for "moderate" democrats.

 

[Valjean]

Economists on the Run
And the key question has to be asked:

Let's just look at that question again:

Now, they're finally understanding something that I've known for a long time.

This is an excellent article, and it's in Foreign Policy, too - not some fly-by-night blog.

It also notes another thing I have noticed all too often:

So, the question here is: Did he (Krugman) and other mainstream economists help put a protectionist populist, Donald Trump, in the White House with a lot of bad advice about free markets?

No. Free market, AKA: Neoliberal, Chicago School, Reaganomic economics, began 40 years ago, when it replaced Keyensianism, so it's nothing new. Except for the very rich, it's been an economic disaster wherever it's been applied.

 

[PureX]

Most 'economists' are and have been full of **** for a long time. People who study money, love money. Just like people who study politics love power. And this love of money and power warps the way they see the world, and the way they see the subjects of their main interest.

It's a lesson the rest of humanity never seems to take to heart, though. I don't know why.

 

[joe1776]

Baron Trump was only 10 years old when his dad was elected president...

I know.

 

[Cooky]

I know.

So "keeping jobs at home" is a 'childish' notion?

 

[Revoltingest]

No. Free market, AKA: Neoliberal, Chicago School, Reaganomic economics, began 40 years ago, when it replaced Keyensianism, so it's nothing new. Except for the very rich, it's been an economic disaster wherever it's been applied.

I saw it beginning much earlier. Consider cars & motorcycles,
which saw foreign imports emerging in a big way in the 60s.
And the extreme form of Keynesianism (continual deficit
spending) never left us because both of the Big Two use it.

 

[tytlyf]

... and for "moderate" democrats.

Like who and what bill? What evidence?

 

[Stevicus]

No. Free market, AKA: Neoliberal, Chicago School, Reaganomic economics, began 40 years ago, when it replaced Keyensianism, so it's nothing new. Except for the very rich, it's been an economic disaster wherever it's been applied.

I think we're talking about the same basic economic philosophy. Conservatives and a great many liberal Democrats threw caution to the four winds when they supported Reaganomics back in the 80s. The same policy has continued unabated, supported enthusiastically by both parties, while alienating the working classes and causing the economic despair which may have been a factor in Trump's election.

The key point supporting this was stated in the article:

Those who advocated anything resembling government interference in markets and “fair trade” (more tariffs, unemployment insurance, and worker protections) over “free trade” were usually branded protectionists and excluded from the debate.

I've observed this mentality in both parties. I've seen how people used very heavy-handed, abusive rhetoric against those who weren't fully on board with this "free trade" business - even while it provided no real tangible benefit to 99% of Americans. However, I think it may have reached a point of diminishing returns, where the abusive tactics of ridicule aren't working as well as they used to (much to the frustration of the elitists and the politically correct).

 

[Cooky]

Like who and what bill? What evidence?

Like Joe Biden, who voted for NAFTA.

 

[PureX]

So "keeping jobs at home" is a 'childish' notion?

Interfering with the inevitability of greed was what was considered childish. Because uncle Milty (Milton Friedman) in the late 70s and most economists since have preached the "greed is good" school of economics. That greed somehow magically results in an equitable distribution of wealth and opportunity.

 

[tytlyf]

Like Joe Biden, who voted for NAFTA.

But don't you support NAFTA? After all, it was a Republican bill that passed with Republican votes?
Would you prefer the US to just have the deal with Mexico instead of Canada as well?

 

[Cooky]

But don't you support NAFTA? After all, it was a Republican bill that passed with Republican votes?
Would you prefer the US to just have the deal with Mexico instead of Canada as well?

I gave you the facts you asked for.

...I don’t support NAFTA. Obviously.

 

[tytlyf]

I gave you the facts you asked for.

...And no, I don’t support NAFTA.

Yes, in 1993. Biden did vote for it. Most democrats did. But only after Clinton added protections for the middle class. I think Biden said he wasn't happy about the whole thing after the fact.

At the time, Canada and the US already had a Trade deal. Mexico did not.
The US wanted a Trade deal with Mexico, Canada wasn't happy. Canada wanted to be a part of the deal. So the Canada/US trade deal was replaced with NAFTA, which included Mexico w/ Canada.